Definition of Inflation in 1913-1919, inflation by category

Although the term inflation in current discussions is used in a variety of meanings, there is one idea common to most uses of the word, namely, the idea of a supply of circulating media in excess of the trade needs. In a previous article by (Kemmener), inflation was described as occurring “when, at a given price level, a country´s circulating media- money and deposit currency — increase relatively to trade needs.” The value of money, like the value of every other commodity, is the resultant of the interaction of the forces of demand and supply. An increase in the circulating media (i.e., money, and deposit currency supported by money in bank reserve) relative to trade needs to make the monetary unit depreciate, in other words, to force down the purchasing power or the market value of the dollar.

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It is evident that when the price level increases, the value of the dollar declines. To double the price is to cut the dollar in half. Inflation, followed by the inevitable depreciation of money, has varied during the six years in different countries. Even in the same country different kinds of prices, as, for example, wholesale prices, retail prices, wages and prices for public services responded with different degrees of promptness and at different rates to inflationary forces. The same thing may be said of the various commodities within each of these groups.

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He writes further:

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Increase in wages has not followed closely enough the increase in price level, and the labor problem has thus continued to be a very troublesome one.

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On utilities:

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Fixed or slowly rising rates for railroads and other public utilities under government control have not kept pace with the enormous rise in the costs of materials and services. There result has been retarded development of out transportation and transmission systems.

This blog is about economics not viewed with an “agenda”. No political football in this blog, just past examples of situations of deflation, inflation, commodities price records, stocks and bonds situation, political conditions, wars and peace. Also some anecdotal evidence of likely causes and effects, no grand scheme of everything ... Continue reading →